ING Group sees buyer progress and stable Q2 2024 outcomes By Investing.com

ING Group (NYSE:) (INGA), a number one monetary establishment, reported sturdy efficiency for the second quarter of 2024, with substantial progress in its buyer base and deposits, notably in cell banking. The financial institution’s payment earnings was sturdy, reaching practically EUR 1 billion, and it stays on observe to satisfy its EUR 4 billion payment earnings aim for the 12 months.

An interim dividend of EUR 0.35 per share was introduced, contributing to a year-to-date yield of over 13%. ING Group anticipates a return on fairness (ROE) of greater than 12% by year-end. Regardless of a 3% improve in whole bills resulting from inflationary pressures and enterprise investments, danger prices had been beneath common, showcasing the power of the mortgage guide.

The core tier 1 ratio stood at 14%, with an replace on the goal ratio of round 12.5% anticipated within the third-quarter outcomes. The financial institution’s profitable execution of its Rising the Distinction technique and its potential to capitalize on progress alternatives underscored its optimistic efficiency.

Key Takeaways

• ING Group’s cell major prospects elevated by practically 250,000, totaling 13.7 million.
• Mortgage sector progress contributed to an increasing lending guide.
• Price earnings was sturdy, with whole charges nearing EUR 1 billion for the quarter.
• An interim dividend of EUR 0.35 per share was declared, with a yield of over 13% year-to-date.
• Return on fairness for the quarter was 14%; a yearly ROE of over 12% is anticipated.
• Bills rose by 3%, primarily resulting from inflationary impacts and enterprise investments.
• Threat prices remained beneath the financial institution’s through-the-cycle common.
• The core tier 1 ratio decreased barely to 14% resulting from share buybacks.

Firm Outlook

• ING Group is assured in reaching its EUR 4 billion payment earnings outlook for the 12 months.
• The financial institution plans to replace the market on its core tier 1 ratio goal with its third-quarter outcomes.
• The complete-year whole earnings is anticipated to be above EUR 22 billion, with working bills aligning with forecasts.

Bearish Highlights

• Complete bills elevated by 3% in comparison with the identical interval final 12 months.
• Wholesale banking danger prices rose resulting from financial issues in Russia.
• Regulatory prices had been decrease than the earlier 12 months, however increased VAT funds had been made within the Netherlands following the Danske Financial institution ruling.

Bullish Highlights

• Retail banking asset high quality remained sturdy, with a positive macroeconomic outlook for home costs.
• ING Group reported a excessive core tier 1 ratio of 14% regardless of ongoing share buybacks.
• The financial institution expects an ROE of over 12% for the complete 12 months.

Misses

• A brief improve of EUR 6.5 billion in risk-weighted property was reported within the second quarter, attributed to mannequin updates and timing of adjustments.

Q&A Highlights

• ING mentioned web curiosity earnings and margins by nation, with expectations of a web curiosity margin above 110 for the 12 months.
• The corporate addressed questions on deposit pricing technique and danger mitigation, emphasizing a nimble and market-dependent method.
• Executives didn’t disclose particulars in regards to the mannequin updates or the price of mitigating actions.

ING Group’s earnings name revealed a robust efficiency within the second quarter of 2024, pushed by buyer progress and stable monetary outcomes. The financial institution’s strategic deal with cell banking and payment earnings technology, coupled with a strong mortgage guide, positions it properly for the rest of the 12 months.

Whereas dealing with some headwinds from elevated bills and financial issues, ING Group’s proactive administration of danger and capital demonstrates its resilience and dedication to delivering shareholder worth.

InvestingPro Insights

ING Group (INGA) continues to exhibit a robust monetary stance, as mirrored in latest metrics and InvestingPro Ideas. With a market capitalization of $57.87 billion and an adjusted P/E ratio of 12.42 for the final twelve months as of Q1 2024, the corporate stands as a major participant within the monetary sector. The dividend yield as of April 2024 is notably excessive at 7.64%, which is consistent with the corporate’s historical past of elevating its dividend for 3 consecutive years—an indicator of its dedication to returning worth to shareholders.

The InvestingPro Ideas spotlight that administration has been actively shopping for again shares, signaling confidence within the firm’s valuation and prospects. Furthermore, analysts predict that ING can be worthwhile this 12 months, corroborating the optimistic outlook shared within the firm’s earnings name. That is supported by the corporate’s profitability during the last twelve months and a big value uptick of 41.56% during the last six months, demonstrating sturdy investor confidence and market efficiency.

Along with the supplied suggestions, there are extra InvestingPro Ideas accessible that supply deeper insights into ING’s monetary well being and strategic positioning.

Key InvestingPro Knowledge metrics to think about:

• P/E Ratio (Adjusted) LTM Q1 2024: 12.42

• Dividend Yield as of April 2024: 7.64%

• 6 Month Value Complete Return as of April 2024: 41.56%

These metrics underscore ING Group’s sturdy monetary outcomes and its potential for sustained progress, aligning with the corporate’s optimistic efficiency and strategic initiatives outlined within the article.

Full transcript – ING Group NV (ING) Q2 2024:

Operator: Good morning, that is Laura welcoming you to ING’s 2Q 2024 convention name. Earlier than handing this convention name over to Steven van Rijswijk, Chief Government Officer of ING Group, let me first say that as we speak’s feedback might embody forward-looking statements, resembling statements relating to future developments in our enterprise, expectations for our future monetary efficiency, and any assertion not involving a historic truth. Precise outcomes might differ materially from these projected in any forward-looking assertion. A dialogue of things which will trigger precise outcomes to vary from these in any forward-looking assertion is contained in our public filings, together with our most up-to-date annual report on Kind 20-F filed with the US Securities and Trade Fee and our earnings press launch as posted on our web site as we speak. Moreover, nothing in as we speak’s feedback constitutes a suggestion to promote or a solicitation of a suggestion to purchase any securities. Good morning, Steven, over to you.

Steven van Rijswijk: Thanks very a lot. Good morning and welcome to our outcomes name for the second quarter of 2024. I hope you are all properly. As typical, I am joined by our CRO, Ljiljana Cortan and our CFO, Tanate Phutrakul. In as we speak’s presentation, we’ll talk about the sturdy quarter we had and I’ll inform you about how we’re progressing on the priorities we set out throughout our latest Capital Markets Day. Tanate will stroll you thru the financials of the quarter and present you the way we’re performing in comparison with our targets. On the finish of the decision, we can be joyful to take your questions. Now, let’s transfer to slip 2. Earlier than going by our sturdy ends in extra element, let’s begin with a recap of the important thing messages from our latest Capital Markets Day. First, we have proven that our entrepreneurship, our relentless deal with our prospects and our collaborative tradition have made us a really profitable financial institution, delivering worth for all stakeholders. This DNA allows us to seize alternatives within the extremely enticing markets during which we function. By executing our Rising the Distinction technique, we are going to seize this potential and we are going to speed up progress, improve our affect and ship worth for our stakeholders. And I’ll now take you thru how we now have performed so within the second quarter. On slide 3, we present how we’re accelerating progress. After a profitable first quarter, we once more had very sturdy business efficiency within the second quarter with a rise within the variety of prospects in lending and in deposits. The variety of cell major prospects elevated by virtually 250,000 with will increase in all international locations the place we pursue progress alternatives. And with this improve, we have grown the variety of cell major prospects by properly over 900,000 prospects within the final 12 months and we’re properly on observe to achieve our goal of 1 million each year. We have additionally grown our lending guide with a very sturdy efficiency in mortgages the place we noticed progress throughout all markets. Development in wholesale banking lending was offset by mortgage gross sales as we continued to optimize capital utilization. On the legal responsibility facet, profitable advertising efforts in retail banking and a stronger deal with deposit gathering in wholesale banking resulted in EUR15 billion in move this quarter. Annualized customer-balanced progress, in order that’s lending and deposits mixed, amounted to six.2% within the first half 12 months, exceeding the annual goal of 4% we set throughout our Capital Markets Day. Then I am shifting on to slip 4, and there we present the rising impacts for all our stakeholders. After rising by 430,000 within the first half 12 months, we now have 13.7 million cell major prospects. And this progress displays the appreciation of our services and products. 65% of our prospects now solely do enterprise through the cell and we’re essentially the most liked financial institution in lots of markets we function with a number one web promoter rating in 6 out of the ten retail markets. We now have a extremely engaged workforce and we’re proud that we’re seen as a job mannequin in advancing LGBTQI-plus inclusion in workplaces worldwide. The variety of sustainable offers has elevated additional with EUR32 billion of quantity mobilized within the second quarter and EUR57 billion within the first half 12 months, which is EUR10 billion greater than final 12 months. In retail, greater than 40% of the mortgage manufacturing within the Netherlands has at the very least an A-label. And at last, we’re exhibiting glorious monetary outcomes for our shareholders. Because of persevering with sturdy profitability, we now have introduced an interim dividend of EUR0.35 per share, bringing the year-to-date yield to over 13% already. Slide 5 lists how we’re delivering worth. Internet curiosity earnings remained resilient, with a rise in comparison with final quarter, regardless of the damaging affect of upper accounting asymmetry. Price earnings was very near EUR1 billion this quarter and we’re properly underway to achieve the EUR4 billion this 12 months that we acknowledged earlier. Most of this progress in comparison with final 12 months was pushed by structural will increase, as Tanate will present you in additional element later. Threat prices proceed to be beneath our through-the-cycle common and we stay comfy with the standard of our mortgage guide. And this has all resulted in a return on fairness of 14% and we’re assured that we’ll finish the 12 months with a return on fairness of greater than 12%. We now have achieved this return whereas working at a wholesome CET1 ratio. With the continued share buyback, we have made additional steps converging our CET1 ratio in the direction of our goal degree and can replace the market on subsequent steps with our third quarter outcomes. Then slide 6. And on this slide, I want to zoom in on a person nation and present how we’re executing on our technique in retail banking. In Romania, we have been essentially the most most well-liked financial institution since 2016. And this appreciation of our digital services and products has resulted in sturdy progress within the variety of whole prospects. And over half of those prospects now use us as their major financial institution. We have additionally been in a position to develop either side of the steadiness sheet and make a really wholesome return. And we firmly imagine we will develop additional and make extra affect for our prospects. For instance, we fully redesigned our digital onboarding course of that now actually stands out within the nation. And we have launched a digital mortgage in Romania with digital monetary approval and collateral appraisal. To extend presence in new segments, as we additionally talked about throughout Capital Markets Day, we now have launched devoted worth propositions for Gen Z whereas we renewed our deal with the prosperous section. And we have elevated cross-sell inside enterprise banking in order that extra prospects use our each day banking packages, which helps to additional improve payment earnings. General, Romania is a superb instance of how we’re rising the distinction. And now I will hand over to Tanate, who will take you thru the outcomes of the second quarter in additional element, beginning on slide 8.

Tanate Phutrakul: Thanks, Steven. As Steven talked about in his introduction, web curiosity earnings was sturdy once more this quarter and improved quarter-on-quarter, regardless of a extra damaging affect from accounting asymmetry. Lending NII elevated for the fifth consecutive quarter, pushed by increased volumes, whereas the margin rose by 1 foundation level. Legal responsibility NII continued to be resilient, because the anticipated normalization of legal responsibility margin was virtually totally compensated by increased volumes. The general web curiosity margin, which takes the event within the whole steadiness sheet under consideration, decreased by 3 foundation factors, pushed by the affect of elevated accounting asymmetry. Now if you happen to go to web page 9, I will present you extra particulars on this. The purpose I would wish to make right here is that the structural drivers of web curiosity earnings developed very properly this quarter, whereas reported web curiosity earnings elevated by EUR5 million quarter-on-quarter. Nonetheless, when excluding the affect of one-offs and the elevated accounting asymmetry, our web curiosity earnings truly elevated by a robust EUR65 million in comparison with the earlier quarter. As you recognize, the damaging affect from accounting asymmetry on a web earnings is greater than compensated by different earnings. I will get again on this on slide 12. On the following slide, we’ll present you the sturdy quantity progress in each core lending and deposits. The business momentum that we had within the first quarter continues within the second, with sturdy web core lending progress of virtually EUR8 billion. We now have been in a position to develop our mortgage guide in all of our retail international locations. This was simply not pushed by restoration of the market, but additionally by rising our market share in some international locations. Within the Netherlands, for instance, we now have grown our market share in new manufacturing to over 16% on the again of offering a superb buyer expertise. Development in wholesale banking lending was offset by mortgage gross sales as we proceed to deal with capital effectivity. On liabilities we noticed core deposit progress by EUR14.7 billion within the second quarter resulting from sturdy efficiency in each retail and wholesale banking. In retail we grew throughout many markets pushed by efficient advertising and supported by the inflows of vacation allowances in some international locations. In wholesale banking our deal with rising deposit paid off with sturdy inflows in fee and money administration particularly. Now turning to slip 11, payment earnings year-on-year was once more double digit as we made virtually a EUR1 billion in charges this quarter. This can be a document. The expansion was notably pushed by retail banking as we had been in a position to develop cell major buyer, energetic funding product buyer, lifting earnings from each day banking, funding merchandise and insurance coverage. As well as, we paid low commissions to impartial brokers and brokers in Belgium. We additionally benefited from favorable market situation that led to increased charges from mortgage brokerage and improve within the variety of funding product trades as properly. In wholesale banking charges had been barely decrease resulting from lending however had been nonetheless at a robust degree. Given a robust efficiency throughout the financial institution we stay assured that we will attain our EUR4 billion payment earnings outlook this 12 months. Now on slide 12 we present what the developments within the totally different earnings traces within the first half of the 12 months imply for our steerage for whole earnings this 12 months. We word that we beforehand supplied an outlook for web curiosity earnings assuming a steady accounting asymmetry leading to a variety of between EUR15 billion to EUR15.5 billion. Nonetheless as this asymmetry remained tough to forecast, we now have now excluded this affect from our outlook. Any affect from accounting asymmetry can be greater than compensated in different earnings. As structural drivers of NII stay sturdy we proceed to information for curiosity earnings excluding accounting asymmetry to finish up within the higher finish of the vary. We’re assured that the payment earnings will attain the EUR4 billion outlook and consequently we now have elevated our whole earnings steerage this 12 months from round EUR22 billion to greater than EUR22 billion. Now on slide 13 we like to elucidate a bit about the fee growth. Complete bills within the first half of the 12 months elevated by roughly 3%, in comparison with the primary six months of 2023. In the identical interval bills, excluding regulatory prices and incidental objects had been roughly 6% increased, which is consistent with our outlook for 2024. This improve was primarily due to affect of inflation on employees bills reflecting wage indexation and collective labor settlement will increase throughout most of our markets. We additionally proceed to put money into our enterprise and needed to pay a better VAT following the implementation of the Danske Financial institution ruling within the Netherlands. Regulatory prices had been considerably decrease than final 12 months as a result of no contribution is required to the Eurozone single decision fund for 2024. For the complete 12 months we proceed to information for whole expense part of round EUR12 billion. On to danger prices on web page 14. Complete danger prices had been EUR300 million this quarter or 18 foundation factors of common buyer lending nonetheless beneath our by the cycle common and demonstrating the standard of our mortgage guide. In retail banking asset high quality continued to be sturdy and we benefited from sturdy enchancment within the macroeconomic outlook for home costs. In wholesale banking, danger prices together with additions to Stage 3 for a variety of unrelated present recordsdata we now have additionally transferred part of the Russian associated publicity from Stage 2 to Stage 3 reflecting the worsening financial outlook in that nation. On the finish of the second quarter we nonetheless have a inventory of overlays amounting to EUR415 million. Web page 15 reveals the event of our core tier 1 ratio which was largely impacted by the continued share buyback which we introduced final quarter. Core tier 1 decreased by EUR1.7 billion because the buyback was partly offset by the inclusion of web revenue for the quarter after reserving for dividend. Complete danger weighted asset elevated by EUR7.3 billion excluding EUR0.6 billion of FX affect. Credit score danger weight property once more excluding FX affect elevated by EUR7.7 billion, partly pushed by a rise in publicity. A brief improve from quarterly mannequin updates had an affect of EUR6.5 billion for which the bulk can be reversed earlier than 12 months finish. This momentary improve has no affect on our capital outlook. Adjustments within the profile of the books resulted in a lower of the credit score danger weighted property by EUR2.1 billion. Operational danger weight property had been steady. Market danger weight property decreased by EUR0.4 billion. The interim money dividend of EUR0.35 per share can be paid on the twelfth of August and we are going to replace the market with our Q3 outcomes on the following steps in converging on our core tier 1 ratio to our goal ranges of round 12.5%. Then lastly on to slip 16. As Steven and I’ve defined as we speak, executing on our technique has resulted in a really profitable first half 12 months with good business and monetary efficiency. Cell major buyer elevated by 430,000 as more-and-more prospects select us as their major financial institution. An rising variety of prospects are utilizing cell as their most well-liked channel. Complete earnings elevated with sturdy NII, double-digit payment earnings progress and we now have up to date our outlook for whole earnings for the complete 12 months to finish up above EUR22 billion. The event of working bills was consistent with our outlook whereas regulatory prices decreased considerably in comparison with final 12 months. Core tier 1 ratio continued to be excessive at 14%. Our four-quarter rolling return on fairness stays very enticing at 14% and we’re assured we will present an ROE of over 12% for the complete 12 months. Now on to the Q&A. Over to you, operator.

Operator: Thanks. [Operator Instructions]. We are going to now take our first query from Benoit Petrarque of Kepler Cheuvreux. Your line is open, please go forward.

Benoit Petrarque: Sure, good morning, gents. Thanks for taking my questions. So, the primary one can be on web curiosity earnings, trying on the two important shifting elements, so lending NII and legal responsibility NII. On the lending NII, clearly very sturdy progress on the quantity facet. It sounds that you simply, or at the very least I’m extra optimistic on the lending NII growth going ahead. I’m additionally a bit extra optimistic on lending volumes for the remainder of the 12 months and likewise on lending margin developments. So, that would be the first sub-question in NII. After which on NII once more, on the web page 22, you present a really attention-grabbing sensitivity. Final quarter, you instructed us that based mostly on the curve finish of March, you anticipate to be between 100 bps and 110 bps on legal responsibility margin. I see a delta based mostly on the present curve of EUR600 million on curiosity earnings from replicating earnings in 2026, which can be about 9 bps on the overall buyer deposit. So, my query is, based mostly on the present curve, are you perhaps a bit extra additionally optimistic on this vary of 100, 110? Are we extra prone to be on the excessive finish of this vary based mostly on the present curve? That’s the query. And that’s only a very tiny query on the asset gross sales. So, wholesale guide is down EUR1 billion. However how a lot is the sort of impact of the asset gross sales in Q2 or H1? I simply wished to get the complete image on an underlying foundation. And in addition, you speak about property up to now and simply questioning the place you might be on that. Thanks very a lot.

Steven van Rijswijk: All proper. Thanks, Benoit. I’ll do the one on asset gross sales and the NII. And Tanate will speak in regards to the graph on web page 22. Speaking in regards to the NII, I feel we are also fairly optimistic. And if you happen to take a look at the volumes in mortgages, to start out with, the volumes had been good. You additionally noticed, if you happen to take a look at the market share of the brand new manufacturing within the Netherlands, it was 16% and better, the place our whole market share is round 13%. So we’re doing very properly. That additionally has to do, by the best way, with our power of our digital channel and interplay with our dealer. So we’re doing very properly. I am very proud of that. You additionally, by the best way, see it in our primary MPS place on this market. And in addition you see steadily rising volumes in Belgium and Germany. And people markets are recovering a bit slower on the mortgage facet. So they’re nonetheless fairly a way off of the place their mortgage gross sales had been or how gross sales had been in ’22 and ’21 and earlier than that point. In order that recovers slower, but additionally within the slower market, we’re doing properly. So that provides us additionally confidence for the long run. In wholesale banking, we noticed additionally lending progress, however we even have a variety of underwrites and mortgage gross sales. And subsequently, I hyperlink query one and query three, we had about EUR2 billion in mortgage gross sales this quarter. And subsequently, you see the overall happening, however we even have a variety of dedicated services that are undrawn. So we develop, however you do not see it within the numbers as a result of it isn’t drawn at this time limit. However we see in our pipelines of offers, that the market is turning into stronger. So from a quantity perspective, we now have a optimistic viewpoint on based mostly on what we see the market shares available in the market, and the way the markets in mortgages and wholesale banking are recovering. When you take a look at the margins, in wholesale banking, you already see a little bit of margin enlargement, okay, it is just one foundation factors, but it surely offers — at the very least it has been steady. And but it surely you now see if the expansion is coming again, when liquidity available in the market ought to turn out to be a bit decrease with quantitative tightening, that ought to have a optimistic affect on it. Let’s have a look at the place that goes. However we noticed at the very least for this quarter, a restricted improve. And deposit margin is holding a properly consistent with what we anticipated. However I’ll let Tanate speak about web page 22.

Tanate Phutrakul: Thanks, Benoit. I feel we wished to offer this mechanical replication of the U curve for the Eurozone deposit guide. I feel that is one determinants of the place our web NII for legal responsibility will go. However I feel there are three different developments. I feel quantity is clearly one by way of deposits. And you’ll see that we’re fairly optimistic about our momentum in by way of volumes, given what we see in Q1 and likewise Q2. We additionally can be decided by the combo of our deposits between time period deposits, financial savings and present account. And what we additionally noticed is that the migration from present account to financial savings account has stopped. So that could be a clear pattern line, which can be optimistic for NII legal responsibility. And the third is the deposit charges itself. And that, in fact, we don’t give ahead steerage, however we reaffirm the steerage that going to ’25, the legal responsibility margin must be between 100 to 110 with a few of these optimistic momentums that I discussed.

Benoit Petrarque: Thanks. Thanks very a lot.

Operator: Thanks. I’ll now transfer on to our subsequent query from Giulia Miotto of Morgan Stanley. The road is open. Please go forward.

Giulia Miotto: Hello, good morning. Thanks for taking my query. The primary one, I wish to keep on the identical matter and double click on on the margins by nation. Is it right that Belgium continues to be below strain most likely on lending and deposits, whereas Netherlands and Germany look higher? Or, you recognize, any additional shade that you would be able to give us by nation could be welcome. After which my second query is that it goes on a distinct matter, capital, the EUR6.5 billion momentary mannequin will increase. So are you able to give us a bit extra shade there? What are these and the way do you why are they momentary, basically? How do you then offset them? Thanks.

Steven van Rijswijk: Yeah, on the margins, I’ll take the query and Ljiljana will take it on the EUR6.5 billion momentary improve. Yeah, it’s true that by way of the international locations, if you happen to take a look at mortgage margins, that they’re higher within the Netherlands and Germany than they’re in Belgium. So what we clearly do, in fact, is after we take a look at pricing of our merchandise and of our providers to our prospects, we take a look at the place we do — whether or not we make the proper return on it. And we’re a return targeted financial institution. And if we’re in a position to make a return that meets our inner return hurdles, then we’ll do it. And if not, we do not. And that is additionally subsequently, nonetheless, if you happen to take a look at the enlargement of the mortgage guide, you see a major enlargement within the Netherlands, additionally on account of the truth that it is a horny market. However I have to say that additionally the mortgage markets in Belgium and Germany are nonetheless a bit sluggish. So there’s some restoration, however to not the tune that we now have seen within the Netherlands already, which is now already again on the degree of home gross sales as of 2022. That is the place we presently are.

Ljiljana Cortan: Good morning, Giulia. On the fashions, sure, we now have seen a brief improve this quarter, which is a bit increased than typical of EUR6.5 billion. And we are saying majority of it will likely be reversed earlier than the 12 months finish, with no implications for our capital outlook. And what can we imply with that? You understand that we execute consistent with our ING mannequin roadmap technique. Each quarter, the mannequin updates. In some quarters, it goes up or down, relying on the timing of the adjustments taken, however as properly on the timing on the mitigating actions which might be being taken in parallel with a purpose to work on that affect. What we now have seen within the second quarter is the damaging affect that you have talked about. Nonetheless, most of it will likely be taken by totally different mitigating actions, primarily danger transfers that we use with a purpose to, I might say, come to the construction degree of RWA that we’ll function at. When you look, for instance, within the final six quarters, you will note a web affect of our mannequin adjustments of round EUR1 billion to EUR1.5 billion, which is the proof that we actively handle our RWA all year long, during which some quarters may need the upticks resulting from these adjustments, however then within the others, taking a danger mitigating motion in place, they are going down.

Giulia Miotto: Okay, thanks. So, if I perceive it appropriately, this damaging EUR6.5 billion affect can be offset by SRTs, is that right?

Ljiljana Cortan: Not simply SRTs, there’s a variety of different, I might say, actions, that are insurance coverage insurance policies, derivatives, hedging, so totally different danger transfers, mitigations, and sure, largely, it will likely be offset.

Giulia Miotto: Okay, excellent. Thanks very a lot. And if I can return on the margin query, something on the deposit margin by nation, as an alternative? Thanks.

Steven van Rijswijk: I will give this to Tonette.

Tanate Phutrakul: I feel, as I discussed already, Giulia, deposit margin is relying on quantity and on combine, to be clear, and the combo, I feel, we now have seen favorable developments by way of stabilization of present accounts, so I feel that is good on the combo, and I feel in Q2, we had such a excessive inflows of deposits, so it moved the web curiosity margin down a bit bit. We had fairly a giant promotion in Germany, so I feel, I simply repeat the important thing drivers, replicated earnings, quantity progress, and blend, these are the important thing drivers for margins, however we stick to our steerage that we anticipate web curiosity margin for legal responsibility for this 12 months to be above 110, and that it will likely be within the hall of round 100 to 110 going ahead.

Giulia Miotto: Sure, thanks very a lot. I used to be searching for extra, like, remark by nation, in case you have any, I do not know, if any nation is trying in another way, or if these tendencies are type of comparable throughout international locations?

Tanate Phutrakul: I feel restricted change per nation. What I can say is that the margin is definitely increasing considerably within the non-Eurozone international locations the place rate of interest surroundings are considerably extra favorable for us.

Giulia Miotto: Thanks.

Operator: Thanks. And we’ll now transfer on to our subsequent query from Tarik El Mejjad of the Financial institution of America. The road is open, please go forward.

Tarik El Mejjad: Hello, good morning. Two fast questions, please. First, observe up on the legal responsibility margins. One of many shifting elements is the pricing on deposits you possibly can’t remark, it is determined by competitors and different components, however are you able to, in your three important Eurozone retail markets, describe a bit the dynamics there by way of competitors and strain on pricing there? And the second query is on prices. I perceive your method on prices, which being very sort of steady and searching for alternatives to optimize prices because it goes, however what are the areas we may probably search for by way of discovering some levers to offset the sticky excessive inflation in prices and assist the joes? And perhaps you possibly can simply affirm that regardless of, I imply, your steerage for prices and revenues, we should always anticipate fairly vast damaging joes this 12 months and damaging joes subsequent 12 months with probably slim to barely enhancing in 2026? Thanks.

Steven van Rijswijk: All proper. The associated fee query goes to Tenate and I’ll say one thing in regards to the legal responsibility margin. Initially, like Tenate already stated, the margin is holding up properly. So, and there are totally different value factors, so within the Netherlands, the bottom deposit fee is comparatively excessive, and that could be a bit decrease in Belgium and in Germany, however there you continue to see in Belgium they work with loyalty premiums, i.e. the longer you keep as a depositor in Belgium, the extra you get, and in Germany they work with advertising actions. So, what we presently see, and also you see it up to now quarters, is that we, in fact, we take a look at our personal merchandise, our personal steadiness sheets, and we additionally take a look at how one can develop in a worthwhile manner our major prospects, and that is how we’re additionally deposit gathering. Now, what we subsequently particularly see in Germany that with advertising actions, and we noticed it within the first quarter once more, as we now have performed within the first quarter additionally the final 12 months, or perhaps it was April final 12 months, that we began a advertising motion on the proper level, in a worthwhile manner, by which we bought a major quantity of deposits in, and that is how we proceed to take a look at. How do you steadiness progress of consumers, worthwhile progress of consumers, with steadiness sheet administration, and with getting extra deposits within the financial institution? Now, and there you see a bit extra motion in Germany than you see in Belgium and the Netherlands.

Tanate Phutrakul: Then a query, Tarik, on expense growth, as we sort of highlighted on web page 13, we do anticipate that the fee growth for this 12 months to be round 3%, a mix of regulatory bills and working bills. We do anticipate that, you recognize, if you happen to take a look at the primary half of the 12 months the place the rise in enterprise progress come from, a number of the huge buckets are actually, as we talked about on our capital markets day, we now have elevated the extent of buyer acquisition prices. These embody entrance workplace employees, advertising bills to accumulate prospects, and also you see that the quantity of latest major buyer is creating properly. This is able to be one of many huge principal drivers of enterprise progress that we see, and also you’re proper that we do not take restructuring provision on a program foundation, however as they arrive, and on this quarter we took round EUR34 million restructuring provision for restructuring in Belgium, which is said to a discount of our operational employees ranges. To provide the consolation in regards to the outlook for the long run, we stick to our CMD steerage, which is that price earnings ratio is able to rise to round 54% subsequent 12 months and gravitate again to 2027 of round 52% to 54% price earnings ratio. So these could be reaffirmation of our steerage for the CMD.

Tarik El Mejjad: Okay, thanks very a lot.

Operator: Thanks, and we’ll now take our subsequent query from Samuel Moran-Smyth of Barclays. Your line is open, please go forward.

Samuel Moran-Smyth: Hello, morning. Thanks for taking my query. So two questions on, I assume, both facet of the steadiness sheet. So on property, web core lending this quarter when annualized was above your 4% annual progress goal, but additionally considerably above Eurozone system progress. While you got here to Benoit earlier, you commented on the core retail markets, so Netherlands, Belgium, Germany, but it surely seems like the very best relative progress this quarter was truly in your challenger markets. So maybe you could possibly give us some shade on which markets you are feeling you take most market share and the place you anticipate that to proceed? After which my second query is on the legal responsibility facet. You talked about a few instances your advertising campaigns in Germany. I admire the newest marketing campaign began in Q1 and went into Q2, however after I take a look at web core deposit progress in Germany this quarter, it was truly fairly subdued in comparison with different quarters the place you have had these promotions. So ought to we take into consideration that as a web quantity the place you may have had inflows, however you have additionally had outflows? And if that’s the case, are these outflows going to opponents or are they going into asset administration merchandise or I suppose any shade there could be actually appreciated. Thanks.

Steven van Rijswijk: All proper. So perhaps on the advertising marketing campaign in Germany that led to a giant influx in Germany of EUR11 billion within the first quarter. So I used to be speaking about that within the context of the primary quarter influx in Germany that was EUR11 billion. And so certainly that it has not these ranges within the second quarter as a result of we didn’t do a advertising marketing campaign this quarter. That was the final 12 months the place we did the advertising marketing campaign in April which then led to an influx of I imagine from the highest of my head EUR16 billion. So this quarter is definitely a deposit influx throughout within the varied markets. However relying on at which time limit we wish to once more push the pedal to develop our prospects, we’ll do new advertising campaigns, however I can not say something about that. However now you see truly improve of deposits throughout the assorted markets during which we function. Then there was a little bit of a static on the road, however I imagine the primary query was about the place do you see most progress in markets in lending? Is that right? Are you able to repeat that query, Sam?

Samuel Moran-Smyth: Sure, particularly in reference to your challenger markets.

Steven van Rijswijk: To the challenger markets? Effectively, I imply, additionally there we see a major progress in a lot of the markets. We additionally see a return of the market in Poland whereby the financial system is steadily enhancing once more and there we see explicit progress coming in that market as properly. So subsequent to the Netherlands that we noticed was very sturdy, steadily markets coming again in Belgium and Germany, however to not the extent that we now have but seen a couple of years in the past. We see a return of the expansion in Poland and we see additionally Italy doing notably properly.

Samuel Moran-Smyth: When you do not thoughts, if I may simply shortly observe up on German deposits. While you speak about advertising campaigns, if I used to be to go in your German retail banking web site proper now, I can nonetheless get, I feel it is 3.3%. So the promotion continues to be there, however are we speaking extra particularly about precise advertising fairly than only a increased bonus fee? Simply to make clear, sorry.

Steven van Rijswijk: Yeah, what we usually speak about when there is a advertising marketing campaign, so which means that you’re allowed to get a sure rate of interest for a sure interval. And after we speak in regards to the marketing campaign itself, it’s in regards to the begin of that marketing campaign. The beginning, after we begin to supply one thing new for a sure interval that’s whenever you see a giant improve within the deposits flowing in.

Samuel Moran-Smyth: Understood. Thanks very a lot.

Steven van Rijswijk: Thanks.

Operator: Thanks. And we’ll now take our subsequent query from Benjamin Goy of Deutsche Financial institution. Your line is open. Please go forward.

Benjamin Goy: Sure, hello. Good morning. Two questions, please. So first on prices, and thanks for the breakdown of the fee inflation. Now we now have seen your two largest markets. You have got basically seen the CAs of the sector or of key opponents. So questioning if you happen to may also help us a bit perceive how your price CAGR seems all through the plan. Was it barely elevated initially given these CAs? After which secondly, on the deposits, and notably if you happen to can share a bit extra shade on the present accounts, which had been properly up quarter-on-quarter. Is that within the byproduct of those financial savings campaigns that individuals additionally deliver over present accounts and use them extra often? Or how will you clarify the expansion? Thanks.

Steven van Rijswijk: All proper. I will do the present accounts query. Tanate talks about prices, as he usually does. So if you happen to take a look at the present account progress that certainly, a part of it’s simply progress of latest prospects coming in. You see 250,000 cell major prospects. And with these prospects, we do extra. And so they additionally usually maintain extra money on our accounts. But additionally, we now have a present account progress on the again of vacation allowances amongst the Netherlands and Belgium and Spain. But additionally, we had a marketing campaign in Italy this quarter as properly. So that is what triggered it as properly. However usually, vacation allowances trigger present accounts to go up. The flip facet of it’s that what we usually additionally see within the third quarter of the 12 months is that you simply see a rise of transaction charges within the third quarter on the again of the vacation interval, as a result of then individuals begin to spend that cash, usually, in our case, by the use of bank card charges. So that can then have a optimistic affect on the transaction charges. That is what we now have seen over the previous 12 months. In order that’s a bit the way it goes. Second quarter elevated resulting from vacation allowances. Third quarter rising bank card makes use of due to the vacations.

Tanate Phutrakul: Then, Ben, by way of prices, notably the collective labor improve, we do see the delayed affect by way of wage inflation. You have got talked about we watch our competitor in a variety of markets like Germany and the Netherlands. So we do anticipate that the fee improve within the brief time period, so ’24-’25, to stay sticky, however that the normalization by way of wage improve to turn out to be extra prevalent in ’26-’27. So extra uptick within the first a part of our planning interval and extra normalization within the again finish.

Benjamin Goy: Understood. Thanks.

Operator: Thanks. And we’ll now transfer on to our subsequent query from Anke Reingen of RBC. Your line is open. Please go forward.

Anke Reingen: Sure, thanks very a lot for taking my questions. The primary is on the slide 22 once more. Sorry for following-up. However in 2025, a EUR500 million step up within the replicating portfolio earnings. Why ought to it not be the same step up within the steerage you gave on the 4.4 submit the deposit price? Is there something that might make the headwind bigger so it isn’t a EUR500 million step up? After which secondly, on the mortgage quantity progress, I imply, it is actually fairly spectacular. And also you talked about market share beneficial properties. Are you able to elaborate a bit about what you are doing to develop sooner than the competitors? Thanks very a lot.

Steven van Rijswijk: All proper. I will speak about mortgage progress. Tanate talks about web page 22. Effectively, I imply, ultimately, however I feel we at all times highlighted that it is a matter of buyer expertise. And what we do is we construct a really sturdy channels. Like we talked additionally about Romania, for instance, the place we stated we now have a digital approval or digital collateral valuation. And it simply implies that we constantly work very diligently, very targeted on decrease time to sure and decrease time to money. So how lengthy does it take whenever you get an approval? How lengthy does it take whenever you get your cash? And within the Netherlands, we now have with our brokers and the dealer channel is the biggest channel for mortgages. The time to sure is lower than 24 hours, which is simply excellent. And I feel it is the most effective available in the market. You additionally see and I do not know the place you come from, however in Germany, we additionally there’s being bought so much by brokers. But additionally you see that in the best way that we do it with our shoppers, we constantly work on try this totally digital so far as we will, so far as legislation permits us to take action. So ultimately, it is creating an surroundings the place there’s extra certainty for patrons in a faster and fewer friction kind of manner. Really easy, instantaneous, private relevance. That is the secret. And that is simply onerous work daily.

Tanate Phutrakul: Then Anke, by way of the step up on web page 22, that is the replicated earnings. And I feel the opposite legs of it, which we do not we can not disclose is what occurs to buyer charges. However we do give on that web page a sensitivity evaluation that each 10 foundation factors or move by has an affect of round EUR400 million on NII. So that is the second leg. The one factor I might describe is that competitors for deposits from what we see within the second quarter has remained benign, that we’re in a position to collect fairly important quantity in lots of markets that we function in. So these are the lacking items that it is advisable to make your judgment is what’s the outlook by way of competitors, by way of retail deposits, and what monitoring do you assume in your mannequin?

Anke Reingen: Thanks very a lot.

Operator: Thanks. [Operator Instructions]. We are going to now transfer on to our subsequent query from Hugh Moorhead of Berenberg. Your line is open. Please go forward.

Hugh Moorhead: Good morning. Thanks very a lot for taking my questions. One on charges and one on danger price, please. So firstly, on payment earnings, sturdy efficiency and insurance coverage this quarter. Is that type of ought to we see that as being pushed by one off like a advertising marketing campaign, for instance? Or are we seeing a bit extra of a structural restoration in that enterprise? When you may simply give a bit extra perception, that might be nice, please. After which secondly, on mortgage losses, I feel price of danger this quarter, excluding the overlay proper again is 25 bps, a bit above your by the cycle steerage. How ought to we view this quarter by way of danger price normalizing? How are you guys fascinated by the evolution of the overlay because the quarters come? For instance, will you type of proceed to make use of the overlay to maintain the price of danger at round 20 foundation factors? And in addition lastly, sorry, can you quantify the Russia, the affect of the switch of the Russia exposures from Stage 2 to Stage 3 as properly, please? Thanks.

Steven van Rijswijk: All proper. So I will give the query in regards to the danger price overlays, Russia, tendencies to Ljiljana, and I will speak about charges. That makes my job enjoyable. So properly, I imply, there are numerous explanation why our payment efficiency is robust. It begins with getting extra prospects within the financial institution who do extra with us. And we now have [technical difficulty] new cell major prospects. Then it is about them doing extra with us once they’re within the financial institution. So if you happen to take a look at the funding accounts, we elevated and I instructed on the capital markets that we now have roughly 4.5 million funding accounts on a complete of 40 million prospects. In order that’s solely, for instance, 11%. So there’s nothing incorrect with it. However which means there’s plenty of upside. And that grew over the previous 12 months with 8% and this quarter with 3%. Then in insurance coverage, as a result of we do extra, and we additionally made particular agreements with insurance coverage suppliers in numerous markets for personal people, however now additionally beginning in enterprise banking, nonetheless comparatively small. We additionally now are promoting extra bespoke insurance coverage merchandise to our prospects, which we didn’t do up to now. So we begin from a really low base. And as I stated beforehand, there’s much more we will do with our prospects. We simply want to supply it to them and begin providing it to them, which we began to do additionally a bit extra in insurance coverage charges. And that is why you see the rise coming from. And the identical goes for each day banking, the place in some international locations, there have been some will increase in value packages. After which on prime of it, and that is extra, for instance, the beta facet of the story. Like I instructed you, there’s some restoration within the mortgage markets, within the varied markets, and likewise in Germany and Netherlands. And subsequently, you see that we now have a bit extra mortgage charges than we had within the earlier quarter. In order that’s steadily recovering again. However plenty of issues need to do, to summarize, by simply doing extra with our prospects and providing extra bespoke options to them within the fields of investments and insurance coverage. Ljiljana, danger prices.

Ljiljana Cortan: Hiya, and good morning. Sure, the danger prices had been EUR300 million, or if we take a look at the web quantity, it is 18 bps by the cycle. Overlays are being made after we imagine our fashions should not in a position to seize totally the danger that we see within the surroundings. And they’re for use as soon as these dangers occur, or they’re to be launched if we do not see these dangers occur. So additionally the typical calculation of by the cycle, danger price consists of at all times overlays. In the case of the particular Russian affect this quarter, you should have seen the uptick, I might say, in S3, so Stage 3 provisions. And from Russia, that uptick is roughly EUR133 million on the facet of the S3, in order that’s why improve. Nonetheless, there’s as properly a partial offset on the Stage 2 affect. Internet affect on Russia is EUR39 million extra danger prices this quarter.

Hugh Moorhead: Nice, thanks very a lot.

Operator: We are going to now take our subsequent query from Farquhar Murray of Autonomous. Your line is open, please go forward.

Farquhar Murray: Morning all, simply two questions, if I could. Firstly, simply going again on the mannequin updates, EUR6.5 billion of RWA, which elements of the mannequin or lending books did that come from? And by way of the separate mitigating actions, may we simply, it must be anticipated price from these? After which secondly, as we transfer right into a chopping cycle, what’s ING’s philosophy going to be on deposit pricing? I feel on the best way up, you characterised it as a sluggish follower. Is ING keen to maneuver the opposite manner on the best way down? Thanks.

Steven van Rijswijk: All proper, I take the query on the deposit cycle or the chopping cycle. After which Ljiljana talks in regards to the mannequin updates. I imply, clearly, we can not say something of our, about our technique by way of our deposit charges going ahead. Clearly, certainly, relying on whether or not we develop and wish to develop in prospects and make our earnings there, it is an financial place we tackle it. So ultimately, it is a balancing between can we wish to have extra prospects on who we in whole then, as a result of we now have extra prospects make more cash? Or can we have an effect by leaving charges as they’re or reducing them and subsequently make more cash or much less prospects? And that is simply an financial equation, which we will not constantly calibrate. We now have been in a interval whereby charges moved up in a short time. After which in some unspecified time in the future, opponents began beginning to transfer. And there we now have seen that in markets the place you usually see that as a challenger, we develop our prospects in a short time. We begin with advertising actions and generally charges increased a bit faster to get these prospects in. And in markets the place that’s not the case, we maintain it way more steady. And we’re in a very good place in virtually all of the markets during which we function. So we can be nimble by way of our approaches, relying on the place we wish to develop and the place we wish to be steady by way of our share or our whole steadiness sheet. And that is how we take it. That is all I wish to say about that going ahead.

Ljiljana Cortan: Good morning. On the mannequin updates, sure, the replace comes from truly varied fashions, however the majority one comes from the low default portfolio within the wholesale banking house.

Farquhar Murray: And is there any price to the mitigating actions?

Ljiljana Cortan: There are danger switch mitigating actions. As I say, these are the low default portfolios. So there’s a variety of devices accessible additionally available in the market and internally to handle these.

Steven van Rijswijk: The query is, are there prices to the mitigating actions?

Tanate Phutrakul: Farquhar, we take a look at three elements of a pyramid, proper? We take a look at income trajectory, risk-weighted asset and return on fairness. And we are going to discover a approach to optimize. We anticipate the affect from a income perspective to be minor by way of managing our risk-weighted property on this explicit level.

Farquhar Murray: All proper. Thanks very a lot.

Operator: Thanks. There are not any additional questions in case. I’ll now hand it again to Steven van Rijswijk for closing remarks. Thanks.

Steven van Rijswijk: Good. Thanks very a lot for listening in and for the decision on the second quarter of 2024. I want you an important summer time. I hope that you simply nonetheless have a while to take a while off and go on vacation. And I am positive we’ll converse once more on the third quarter. Thanks very a lot.

Operator: Thanks. This concludes as we speak’s name. Thanks to your participation. Keep secure. It’s possible you’ll now disconnect.

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